Liberty Media bid $1.02 billion for Barnes & Noble (BKS), a 20.5 percent premium over the company's share price at yesterday's close. B&N had put itself up for sale but had no bidders, so the offer is good news for the board of directors.
On the other hand, it's just more bad news for the book selling industry. The business of selling paper books in physical locations is dying. Sad? Yes, for those of us who like books. But the change isn't slowing down for us. Liberty has no innate interest in a chain of bookstores. What does grab the company's attention is the Nook e-reader and relationships with content producers who have digital products.
A world of pain
The entire industry has huge problems. Borders (BGP) is in bankruptcy, which has freaked out publishers. One small press told me that a quarter of its annual print run used to go to Borders. Now, it sits on hundreds of thousands of dollars in receivables tied up in the bankruptcy process.
B&N's management and competitive problems have been evident for a while:
- Chairman Len Riggio put his family's interests ahead of the company's
- Target, Wal-Mart, Costco, and others undercut B&N and other bookstore chains by skimming the sales of top titles at highly discounted rates
- As people take up e-readers and tablets, they buy from online e-book stores, not from regular bookstores
Publishing is going electronic and B&N got a premium bid because it moved effectively into the e-book realm, which Liberty Media wants. Liberty owns such companies as QVC, Evite, and Expedia, and it owns a sizeable chunk of Sirius XM Radio. The future of media is electronic, and buying B&N quickly puts it into the e-publishing arena. Borders continues drowning because it got into e-books too late.
B&N stores go along for the ride, just as Blockbuster's locations did when Dish Network bought the video chain. The business relationships with content producers are the value. Physical stores might serve a purpose for a time, but unless someone figures out a way to draw readers in to individual locations, rather than online catalogs, the days of chains are numbered.
And it's not as though the independents have anything to rejoice as the future closes on their competitive boogeymen. They're in an even worse position and have started to react badly out of fear. Apparently a number of indies are calling for a boycott against author Joe Konrath because he signed with Amazon's new Thomas & Mercer imprint:
Me, who has signed at over 1200 bookstores? Who has thanked over 1500 booksellers by name in the acknowledgements of my novels? Who has named five major characters in my series after booksellers? Now I'm the bad guy, for wanting to continue my series and make a living?What, do business with the evil Amazon? No, they can always go gentle into that dark night.
- Tablets and Smartphones Push Amazon's Kindle Sales Past Paper
- B&N's For Sale, But Even a Bargain Isn't Bringing in Buyers
- Selling Barnes & Noble: "Strategic Alternatives" Are Just Another Way to Say We Want it All
- Why Barnes & Noble's Nook Subscription Sales May Spell the End of Its Stores
- Readers Shift to Ebooks; Publishers Take to Drink
- What Happens to Barnes & Noble Now That it Won Shareholder Fight
- Will the Last Book Publisher Please Turn Out the Lights?